16. RELATED PARTY TRANSACTIONS
Certain key terms of the following related party transactions of the Company, which are subject to and qualified in their entirety by reference to their respective underlying documentation as applicable, are outlined below. Copies of such documentation have been provided or are available upon request, and the summaries below are qualified in their entirety by reference to such documentation.
16.1. Real Estate Support Management Agreement of Knowledge Learning Corporation
KLC entered into a Real Estate Support Management Agreement with Greenstreet Real Estate Partners (formerly Greenstreet Realty Partners, L.P.}, an entity controlled by the Principals, on January 4, 2006, pursuant to which KLC obtains certain real property support services from Greenstreet Real Estate Partners. The Agreement is non-exclusive and the Company may consider and solicit proposals from other entities. Payment obligations are to be provided for in separate agreernents, none of which have been entered into as of the date of this Memorandum. The initial term of the Agreement expires on December 31, 2016 (with automatic one-year extensions unless notice is given to the other party). The Agreement can be terminated by either party for convenience on December 31 in any year or for breach with prior written notice.
16.2. Fixed Overhead Payment Agreement
As reimbursement of expenses incurred by KULG, an affiliate of the Company controlled by the Principals, on behalf of KUE and its subsidiaries (including salaries and bonuses of KULG employees providing services to KUE and its subsidiaries, fees and expenses relating to financing transactions and acquisitions, professional fees and other administrative expenses), KUE has an obligation to pay $20 million annually to KULG in quarterly installments beginning July 1, 2006 pursuant to the Fixed Overhead Payment Agreement. Of this amount, $2.5 million will be paid to KUE by KLC pursuant to the existing Management Services Agreement described below.
16.3. Note Payable to KULG by KU Education, Inc.
On January 6, 2005, KUE Inc. executed a promissory note in favor cf KULG, an entity controlled by the Principals, in the amount of $200.0 million, the proceeds of which were used in connection with the acquisition of KinderCare by KLC. This note has a seven year maturity and accrues interest at the "reference rate" set by Bank of America plus 1.25% per annum. The note may be prepaid, in whole or in part, without any premium or penalty. KUE Inc. currently owes approximately $183.9 million under the note.
16.4. Asset Management Agreements with Greenstreet Real Estate Partners (formerly Greenstreet Realty Partners, L.P.)
Greenstreet Real Estate Partners (formerly Greenstreet Realty Partners, L.P.), an entity controlled by the Principals, entered into asset management agreements dated as of November 9, 2005 with each of KC PropCo Holding | LLC (“PropCo Holding”), KC PropCo, LLC (“PropCo”) and Mini-Skools Limited (“MSL”), each an indirect wholly owned subsidiary of KLC, pursuant to which Greenstreet Real Estate Partners provides asset management and consulting services to PropCo Holding, PropCo and MSL with respect fo the reai property each company respectively owns, in return for a total annuai fee of $8,250,000 payable in 12 equal monthly installments starting December 1, 2005. The initial term expires on December 31, 2016 (with automatic one-year extensions unless notice is given to the other party}, and the Agreement can be terminated for breach with prior written notice.
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